FedEx (NYSE: FDX) has confirmed the release date for its fiscal Q2 2022 earnings which is on Thursday, March 17, 2022, after market close.
What to look for: The company is expected to report revenue and earnings expectations. Ground and Freight operations will boost revenue growth, with operating margins expected to see some growth. In addition, the company's management indicated that they expect operating margins to move higher in 2H as labor shortages ease.
Earnings: Stockearning’s Estimated EPS for the current quarter under review is expected to be $4.7. in the last quarter, the company reported an earnings surprise of 14.18% to post earnings of $4.83 per share. The company's earnings grew during the quarter thanks to the solid performance of the FedEx Ground segment. Historical EPS performance shows that the company has, in the past 12 quarters, topped EPS estimates 19 times (52%) and missed 17 times (47%). For the full fiscal 2022, the company is expecting EPS of $20.98 relative to $18.23 in fiscal 2020.
Revenue: The company expects Q3 2022 revenue of $23.4 billion. FedEx Ground business is expected to have benefited from the Omicron surge, and consumers prefer e-commerce shopping for their needs. In the second quarter, the company had total revenue of $23.5 billion, representing YoY growth of 14% with growth across all segments.
Stock movement: FDX shares have lost 10.6% since the company released its last earnings release. Interestingly, following the earnings release, the company's shares have been UP 25 times in the past 48 quarters. So, the historical price reaction suggests a 52% probability of the share price going UP following the earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-4%, while the predicted volatility on the seventh day is +/-5%.
Analysts are saying: KeyBanc analyst Todd Fowler slashed his price target on the stock from $325 to $300 and maintained a Buy rating. Ahead of Q3 earnings, the analyst adopts a cautious approach in the short future. He believes that Q3 peak patterns were largely positive and that concerns about weather and labor interruptions should be dismissed. While Fowler feels that direct Eastern European risk is minimal, he expects that rising geopolitical concerns will start to be evident in outlook commentary, putting downward pressure on projections.
JPMorgan analyst Brian Ossenbeck also lowered his price target in FedEx from $312 to $297 and maintained a Buy rating on the shares. FedEx's shares have languished through a continuous stream of climate and COVID associated service advisories, as well as the current burst of geopolitical tension, according to the analyst, who is "positive" going into the Q3 earnings report on March 17. While these are all additional negatives since the company's mid-December guidance, Ossenbeck anticipates a Q3 beat and reaffirms his fiscal 2022 guidance on rising fuel costs.
Recently Argus analyst John Eade raised his price target on the stock from $270 to $285 and maintained a Buy rating on the shares. Even though volume patterns are good, increasing employee expenditures are limiting the company's profits in the short term, according to the analyst. FedEx's balance sheet, however, remains strong, according to Eade, and management recently expressed confidence in the company's prospects by raising its dividend by 15% and expanding its share buyback program. The analyst goes on to say that FedEx's stock is appealing because of its lower-than-average valuation.
Related News
Vail Resort Inc. (NASDAQ: MTN) Earnings Expectation, Fiscal Q2 2022 EPS of $5.73 on revenue of $966.3 Million
Oracle Corporation (NYSE: ORCL) Misses Q3 2022 Earnings But Matches Revenue Estimates